season 1 Episode 7: Riccardo Gubbioli

Discover the world of growing carbon-rich storage capture as we engage in an enlightening discussion with Riccardo Gubbioli. Delve into the intricacies of carbon capture and storage, gaining valuable insights and innovative strategies to promote sustainable solutions for a greener future. Join us for this captivating talk that explores the potential of carbon storage technologies and their impact on environmental conservation. Prepare to be inspired by unique perspectives and empowering knowledge that can drive positive change in the fight against climate change.

Season 1 Episode 7: Riccardo Gubbioli Edited transcript


Section one: corporate finance in the renewable energy sector

Chris Caldwell: Riccardo, thanks so much for inviting us into your fantastic offices here and for spending some time with us to talk about your fascinating journey and, ultimately, where you are today: where carbon capture and storage meets Ag tech. What a wonderful space! It’s great to have the opportunity to talk with you. So, can we start off by having you introduce yourself and your journey to this point?

Riccardo Gubbioli: My name is Riccardo Gubbioli and, at the moment, I’m the director of corporate finance for a startup called Susewi (Now Brilliant Planet) and we are in the carbon capture space. My journey in decarbonization and wider sustainable enterprises started post London Business School when I finished my MBA in 2007, so 15 years ago.  At the time, I joined a private equity investment company.  I was investing in this new thing called renewable energy. It obviously was not new because it has been around for many years, but the interest was substantial back then.  But it was still very much in its infancy.  

When I started in 2007, capital costs were very high.  There were a lot of government incentives, tariffs, etc., which made it profitable and interesting for investors to go into that sector at that time, but it was still quite high risk.  I was then part of that journey through the financial crisis and the post financial crisis.  I saw the renewable energy industry really changing from being a niche on very few people’s radars to becoming much more mainstream.   If you think about it, for example, in terms of capital going from the private equity players who were looking at a higher return, higher risk, it’s a little bit more stable now along with having more infrastructure players. Even so, there were quite a varied set of investors in the space. 

That was roughly the time I actually changed and left the renewable energy industry.  I spent a couple of years as a consultant and then I started where I am now.  We’re just about to rebrand.  The announcement will come out next week, but as of last week we are officially called Brilliant Planet. 

Chris: Very cool!

Before we move on to your current term position and the interesting technologies and experimentation you do there, tell me a little bit about how you feel corporate finance fits into that renewable energy sector.

Riccardo: When I think about corporate finance, I really think about different forms of capital, those being your equity capital, your debt capital, and grants as well. And then, within the equity and the debt, also the in-betweens, mezzanine, structured finance.  When I started renewable energy (we’re talking about 15 years ago) you were allowed relatively high leverage because the incentives were so high and they were government backed.  Government incentives got quite high. So, these incentives and tax advantages allowed you to really leverage assets quite high, which, as an equity investor, has always been part of the game.  It is an important way to attract capital into that particular segment because you can have quite high returns. This was about 15 years ago. 

I think as the markets developed, the cost of capital within renewable energy has decreased.  When we look at projects now, they’re doing the single digit sort of returns, unlevered returns.  I think that’s really changed the type of investors which are going in.  The banks have remained the same. They remained consistent.  If anything, the banks are better now in some ways because now they’re more open minded. They used to be really restrictive on equipment. You would usually have some wind turbines which wouldn’t be financed or there would be much worse terms.   Now it tends to be a little bit easier.  There’s much more background and more previous data to help the bank with that. 

What has changed, I think, has been on the equity side.  In my view, there’s been a big move from a higher sort of risk reward players, which might be private equity, to companies which are much more stable but with lower returns, such as infrastructure investment type returns. For more traditional pension funds or insurance companies and so on, the different stages of a project are now quite defined, I think, by the capital structure. 

The early stages, the development stages, are still potentially higher risk capital and also once in a construction phase, but after the construction phase risk typically tends to be lower. So, I think in answer to your question, Chris, corporate finance has played a role that we have seen in terms of the development of the renewable energy industry and it’s becoming mainstream. I think this happened because of the early investors.

Chris: The industry has matured and developed since, gone through a natural lifecycle, and we’re now in a place where renewable energy is rightly seen as infrastructure. It was always infrastructure, but there were perceived technology risks, of which some were real, some were not.  And technology has certainly improved, particularly on the solar side. So, yeah, it’s very much mainstream now.  And corporate financiers, such as yourself, have played a key role in moving us down that path.


Section two: new tech meets climate change

Chris: So, now let’s talk about the meat of the interview: your new sector.  Please tell us about your new 

company, your new technology and how you are impacting climate change.

Riccardo: What we do as a company is develop our own technology to grow microalgae. So, I am sort of joking when I tell people to imagine the things you don’t want growing in between your bathroom tiles, those green things.  That’s actually what we are growing.  People are typically like ‘’algae–we don’t want them!’’  In fact, they’re a pretty amazing species. First of all, they have been around for billions of years and they’re very evolved as a species in themselves. It is really interesting because obviously they’re microscopic, but they have a variety of properties around them which make them very useful for many different things. You can get food out of them.  You can make clothes out of them.  And, the other thing is they are a biomass, so they are like trees.  You are growing them.  You’re growing them with photosynthesis from the sun and carbon dioxide from the air.  

What my company does is we have a specific technology which allows us to buy prospect relevant algae for different specific uses.  For example, you say I might want to have a product which is rich in protein.  We know what type of algae we can grow so we’ll have the best protein ratio. Similarly, we want lipids, so again, the same thing with lipids.  Also, we cross-reference that with the amount of carbon they take from the atmosphere, the time it takes them to grow, the energy it takes to grow.  So, it’s obviously a complex matrix, but this is what we do. 

The other thing we do, and we have patents for it, is the process of growing it.  Algae have been growing naturally in the ocean for literally millions of years and it just happened, but when you look at the history of making them grow artificially, it has traditionally been fraught with failure.  If you cast your mind back to when I was starting in the renewable energy industry around 2005, 2006, 2007, there were a lot of high-profile investments, for example one called Sapphire Energy, which were into growing microalgae. Now, they were really into growing microalgae in a very synthetic way and competing when oil was at a very high level. 

Obviously, oil has been coming back recently, but for the last ten years it wasn’t like that. And, you know, they were able to compete in a high oil price scenario as very specific fuels.  They were really using microalgae for biofuels. The typical customers were initially thought to be U.S. aviation, U.S. Air Force. So, it was being produced for very specific uses.  The idea was that you could grow the algae independently and therefore mitigate any risks to the oil producing countries.

Chris: That’s great! We should go back there!  You say they are not in business anymore. What happened?

Riccardo: Well, what happened? And that’s a problem! That’s where we came in a little bit. They had a very, as I said, synthetic process, a very complex process whereby they were taking algae from a library and growing it in very artificial static situations.  That means you had to build around it a massive infrastructure. A lot of the people who were in biology at the time or the oil and gas industry were used to expensive structures around them. So, you had very expensive full bioreactors. You were importing carbon dioxide, pumping it in, you know, having both very high investment costs and operational costs.  Ultimately, if you look at the history, we all know what happened to oil prices about ten years ago. They went down and they stayed low for a long time.  The product would have only been competitive if the oil price kept on going up.


Section three: a bend in the road

Chris: There’s generally a technology curve.  Eventually people get better at doing it. So, if this technology exists, these algae exist, they can be producing biofuel. Why isn’t there more money going into reducing all these costs?  That’s the way things are. You spend more money in R&D, costs come down.

Riccardo: That’s true. I think there were a lot of high-profile deaths. Let me put it like this: very important companies, a lot of very savvy investors got caught out.  I think that made people, like any boom and bust, a little bit more wary about the risks.  And we face that quite a lot as well.

 So, what we did as a company was, we looked at our failures and we learned from them.  That’s why we then moved to very natural processes.  Instead of getting algae from a library and growing it synthetically in the middle desert, we actually grew algae pretty much as it happens naturally.  We grow our algae by the sea with the local species and in a natural environment.  What this means is that the algae are naturally ready to compete with their predators, which could be many other algae, you know, fish, etc.  Within a natural environment, you don’t need to shelter them to grow them. They naturally exist. Survival of the fittest. That’s how we’ve adapted the technology.

Chris: So, you have just gone through a library of existing algae. You haven’t tried to splice or dice. Instead, you say, that one has got properties that we like. The look of its natural environment is here.  We’ll go and build a plant there to try and do it. So, you built a demonstration plant inside this plant?

Riccardo: Yeah.  Just to clarify, we have our own library. We built our own library.  We have 1200 species in our library right now. We have a location off the coast of Morocco. It’s a beautiful location in the middle of the desert.  And it’s perfect because obviously this land has no alternate use. It does not take away from food production or anything else and obviously comes with relatively low cost.

Chris: But what about water?  Where do you get water from in the middle of the desert?

Riccardo: Well, we are on the coast.  The way our technology works is we need to be very close to the coast. Our land is about ten meters away from the coast. There’s a road and then there’s the coast.  What we do is we build a pipeline into the sea, into the ocean and pump the water in.  At full scale this becomes a water project in which we are effective at moving a lot of water in and out of an open system.


Chris: And then what you do is build tanks and grow the algae in large tanks of water in the middle of the desert.


Section four: a new process

Riccardo: In a basic form that’s correct, yes. In the actual process itself, there are three phases. We have a batch process and every batch takes about 30 days from start to finish. So, in 30 days we have a new batch coming online and then we harvest it and we have a final production.

We start in the lab and we have a multiplication system.   We start with ten ml of water then add another ten so we have 20ml, and the day after you add another 20ml to have plenty. It’s an exponential growth system. The algae’s multiplying during the daytime when in the system. 

We start in a lab with small amounts and then after about ten days we move to the greenhouse area where we’re still relatively small, but we’re now talking about 800 square meters within a greenhouse. Then that takes another ten days and we have several of these so-called raceway ponds. They are allocated pools. And then we move to the outside area where we have the proper large scale raceway ponds.  And again, these are increasing to double in size every time.  

Our maximum size at the moment is 8,000 square meters, but at full scale we’ll be at 12,000 square meters.  It is about a meter in depth give or take. Then imagine we have hundreds of these adjacent.  We have a so-called modular system where we grow the algae, including what I just said, in the lab, the greenhouse and the outside ponds.  You can build on different modules to have a full-size production system. Now, for us, this is still in the future.  

At the moment, as I said, we have an operational plant.  It is an operational pilot plant and this has been really a prototype to allow us to explore and demonstrate the technology, demonstrate we can grow the algae, understanding all the issues that come with it.  Even though it’s a simple natural process, there are still things we need to explore.  We are in the R&D phase.

Chris: Okay, fantastic. And so, you’re growing this; you’ve chosen this particular type of algae for 

particular properties. What properties are you encouraging?  Why choose this one?  That’s not a biofuel, but what does it do?

Riccardo: Well, as I say, we have a large library, and within this library we can select algae for different uses.  We’ve been in this game for about eight years and we’ve evolved within this time.  Initially, as a company, we started looking at fishmeal substitutes as part of the aquaculture industry, as food for the salmon, in our case in particular. And now we’ve evolved, I think, a little bit more towards other higher value food products and carbon removal.

Section five: carbon market shifts

Riccardo: We have two key markets at which we look at the moment. The most important one for us and, obviously, for compensation is carbon.  We’re looking at being an active participant in supplying carbon credits in the voluntary carbon market: high quality credits which can be traced from start to finish both in quantity, location and certification. Historically, over the last few years, there have been some kinds of questions about whether these are genuine projects or something that would have happened anyway.  We’re really focusing on demonstrating that part.  So, we work specifically on new projects to remove carbon from the atmosphere.

Chris: I want to talk a little bit more about carbon markets and how they work because, you know, it’s a fascinating, fascinating world and it’ll be increasingly important as we try to get to net zero.

Riccardo: Carbon markets have been around for many years, obviously. There have been a number of, I would say, false starts in carbon markets. When I started looking at voluntary carbon markets, prices were about $50 a tonne. In the year after they were zero and pretty much stayed zero.  Obviously, there’s all the non-voluntary carbon markets like the EU ETS scheme.  Carbon markets are a contentious point, I think, for many people.  A lot of people will debate whether we should have a carbon tax and I’m not going to get into that. But the markets which are mandated, for example, in Europe have specific targets, but then they input a lot of carbon credits. The prices were zero, so they didn’t really take-off as expected.

Chris: Yeah, well that has changed a bit recently though.

Riccardo: Well, that’s historically.  I think it has been really picking up over the last few years because the structure has changed.  There are actually way fewer carbon credits going into those markets.  And, the other thing which we’re seeing is the voluntary carbon markets.  A lot of companies, big companies, are keen to show that they are working towards decarbonizing and reducing greenhouse gas emissions.  Now, obviously, you would say stop producing, you don’t produce anything, but that would be counterproductive, clearly.  

I think it’s really interesting because companies are looking at ways that they can do that.  I think it’s a multipronged strategy.  On the one hand, being more concerned about the energy they use, reducing use of energy, but, at the same time, there’s going to be a baseload effectively, which they’re not able to cut. So, then what can they do to then offset their carbon usage? And that’s where people like us would come in to voluntary carbon credits.  

Everyone likes to use the example of Microsoft and Google and big corporate sort of technology firms, which are really actively looking at how they can reduce their carbon. Those are the kind of markets we should be looking at to start off with, because these companies understand and a lot of companies are going to try and reach their goals for 2030.  Interestingly, a lot of corporate consulting companies are quite active in these markets as well, and are looking at ways of reducing their carbon footprint.

 An important aspect has been distinguishing high-quality credits.  What is a genuine credit that really represents traceable removal of carbon dioxide? You can trace it and you can see it’s been removed and you can go identify where it is buried as opposed to other sometimes dirty projects, which are a little bit less clear about exactly how that carbon was removed.  I think there is going to be, I would say, a flight to quality in terms of carbon credits and the corpus of high-quality credits.  That’s what we are aiming to be and that’s where we expect to be.

Chris: One of the trickiest problems now is certification. There’s a class of people who are out there trying to certify and there’s a mixture of quality among them. I would imagine that there’ll be two or three champions, winners ultimately in the game. How do you go about how, say, you’re thinking about your own certification process? Have you started to be putting yourself through the accreditation process with these guys?

Riccardo: To be very honest, we are just starting out. At the moment we are still at the stage where we’re evaluating the different companies which provide the service. There are a number of companies which provide it, but there’s a few, I’ll say three, key players we are looking at. On the one hand, you have the conversations and the agreements with these companies to come and certify, and this is what our clients already are requesting, so we’re aware of this. On the other hand, we look at our production system, even though it’s a nature based, relatively simple procedure.  We’re actually very tech savvy, very conscious. So, in the production system, from the design phase, which we are in now in our camp, we really look at integrating sensors and measurements and having a very clear idea of the volume.  From the volume, we can then figure out the mass of different stages of our production, and make sure that we quantify and qualify productions.

Chris: And what is your special sauce?  If you are just taking particular types of bugs and putting them into seawater, saltwater, what’s to stop someone else just going out to do that?

Riccardo: Well, they are welcome to join the party. You know, we’ve been doing this for eight years. And even though it looks simple, it is obviously like any research and development activity; it might look simple when it’s done, but there’s a lot that goes behind it.  You know, just the bio prospecting, the understanding, the growth…We do a lot of analysis of the growth cycle and to understand what is actually motivating the algae so that they grow, the actions to grow, what impact the light has on them, what impact the heat has on them.  So, you know, just the bio prospecting, the understanding, the growth, this is all a scientific process which obviously takes a fair amount of observation and analysis before we get there. We’re constantly evolving this thinking.


Section six: Making a match in Morrocco

Chris: And you have a lab around the corner from here in Camden. What are the differences you’ve noticed from the lab environment in Camden and the desert environment–you know, on the other side of the world?

Riccardo: Well, because, mind you, I’m not a scientist, I’m more suited to the finance aspects.  I think I will do a disservice to my colleagues on the science side. As a company, we have about ten people in the science side and then five people, including myself, on the business side. So, they would be able to give a much better response. 

The biggest difference when we are outside is predators. When we’re in a lab, we don’t have predators; we are growing things in in a safe, closed environment.  When we’re outside we have predators: there could be fish, there could be other algae, there could be other species in the water.  These could be birds who are eating the algae or that are defecating on the algae.  The key thing for us has been when we are in the lab, we have a protected environment. That’s why I’m going to take you back to our three-stage production process. Think about allergies. Children, when they’re young and small, you keep them in a nice, safe environment, typically while trying to help them grow and teaching them how to behave. That’s also what we do in the lab. Then we go a bit larger. We put them in university, which is the greenhouses, so they really find their own feet. And then we put them out in the big bad world, which is like the outside ponds.  And by that time, they can fend for themselves.  It is a simple way from a business perspective of expanding the environment.

Chris: So, Morocco has been a really interesting place to set up. Could you tell us a little bit about the cooperation funds that you have from local governments and also the various challenges you have come across?

Riccardo: Morocco has been a is a great place to be. We actually started a partnership with the Moroccan government as part of COP22. The government basically saw our algae, our project, as part of their commitment towards reducing greenhouse gas emissions. As you might know, Morocco is also heavily invested in wind energy and also to a large extent in solar energy.  For example, adjacent to our land, and of interest to you and me, given my background, there are a lot of very high capacity, large scale 300 megawatt, 450 megawatt wind production sites.  But, as I said, we started our relationship with COP22.  We were part of the solution that the government saw and, as part of that, we had a very strong support from the Moroccan government at the highest levels.

We have a very high-ranking person as part of our local company, which has helped us a lot in developing relationships and in understanding the local nuances, which I think is very important in local partnerships for navigating all the differences.  Morocco, for example, is a very bureaucratic country.  You have a lot of things to do, but the important thing has been doing them the right way and being aware of them. You can obviously navigate that, but if you come there, like in any business, with expectations from London, you’ll be surprised at what you find on site. And that goes, I think, for any in business in natural resources.

But, as I said, we’ve had a lot of support from a lot of government agencies in Morocco, for example, the aquaculture agency. Even though aquaculture typically is linked with the growth of fish, in our case, because we’re dealing with water, we still fall within the aquaculture section.  We have also had support from other government agencies all the way down to the local legislation.


Section seven: capital in search of good projects

Chris: Any advice that you could give to other people who are thinking of stepping out into an entrepreneurial venture in this type of deep lab science, technology type of industry?

Riccardo: Well, I think, first of all, I would say do it. I think for me, coming from some corporate sort of finance, investing background, I think there’s a lot of capital, especially these days, looking for good projects.  In reality, you know, when I was sitting on the investor side, one of the challenges even though we had the capital was finding the right project. As an entrepreneur, if you’re going to be developing such a project, I think that what you need to do is to be able to show that yours is a good product. Obviously, there’s the initial bits that go without saying, which are probably the hardest ones: do you have the right technology that could deliver in the right thing? 

I think what has worked for us is we are proposing a large-scale solution to climate change.  What people, what investors particularly like about us is the potential for scale. What we do is great, but if we do it at a small scale, it’ll be just an interesting project and you might get one ultra-high net worth individual backing you.  That’s going to be end of that. So, I think for me, the main thing would be to really think about your scalability and the problem you’re addressing and making sure that it is a scalable problem. The same applies with a SAS investment in software. You know, what is the credibility of it? It’s a similar thing. 

One interesting thing I’ve noticed in recent times is a lot of the traditional venture capitalists and early-stage tech investors are now growing and putting together, opening and starting new climate tech funds. That’s very much where we are. In fact, we’ve recently had an investment exactly in the back of that. And I think a lot of traditional investors are now much more open to climate tech as part of the solution towards climate crisis. So, there’s a lot of capital moving and chasing progress. But again, they’ll be looking at the things which are problem solving and is it a scalable solution? And then, obviously, all the other things which a typical busy investor will look for: is this the right team and in the right place? And, have they done the right things today?


Section eight: the multi-faceted potential of algae

Chris: The conversation so far has been very much on carbon capture and storage.  You grow algae and it takes the CO2 out as it grows. Then you desiccate and bury it and it is captured. The other part of what you were talking about was, well, you grow this particular kind of algae for a particular reason and it has particular chemical properties. Our conversation has been very much about the carbon capture and storage rather than the chemical properties.

Riccardo: So, interestingly, when the company was started, it was started on the back of a patent and the patent is called Method of Carbon Sequestration. A little back story, our chief scientist who came up with the technology, initially started developing the technology in response to the Virgin challenge issued many years ago now, about ten years ago, which was: can you come up with a method of removing, I think it was 100,000 tonnes of carbon dioxide from the atmosphere? And that was the challenge.

Chris: That was Richard Branson.

Riccardo: Richard Branson’s challenge, correct. In effect, no one won, but that’s what started our company and that’s the first patent that was put out. It was registered as a method of carbon sequestration. It’s been an interesting journey because, as a startup, obviously, you pivot and change and you adapt and you survive. 

So, algae, without boring you, are super interesting as a system because it allows for growing many different things.  You can grow food from algae; you can remove carbon dioxide from the atmosphere; you can use it for many different things.  You can use it for egg white substitutes, for example, and for industrial processes. You can really do a lot of stuff with it. 

Now we have different strains which will grow with different properties.  The chemical properties of the algae are obviously important, but one of the challenges we faced is: sure, we can do a lot of different things with the same basic algae, but do I use type one and type two or type three?  Which one we pick will give me, say, a different product.  

The question is really what market we want to be in. So, you need to think about your own market. Look at us.  As I mentioned, we are in the carbon market, but we also have a secondary market which is actually, in a way, a more interesting market.  We are in the sustainable foods market. We are looking at beta carotene.  Beta carotene is an ingredient that goes into many foods. It’s produced in a synthetic way mostly. So, like with many other ingredients in our food, companies which produce it are looking at having more sustainable ways of producing it from A, a sustainability perspective, CO2 reduction and from B, a resourcing perspective; they want to have multiple choices of where to source it, and C when they look at the properties of what is in it, obviously natural solutions are typically better.  So, you know, one of the other markets we’re developing is beta carotene.

Chris: Why produce beta carotene when you can be replacing motor fuels?

Riccardo: Well, one thing to realize is petrol prices right now are in a bit of a flux as we speak, but for the past couple of years, they’ve been relatively stable, even though it was just steadily increasing slowly.  So, there’s a couple of key things there. A, we’re growing some things, so we’d rather try not to burn it because, you know, it goes against our sustainability credentials. That’s one big part and the other part is, you know, we can use that as food.  And with the food markets, without getting into the specifics or dollars or pricing, but food markets for simple beta carotene are actually very lucrative. So, for us, a very small percentage of what we can produce goes into the market, but within that sliver, and it’s not a big market, still, it is a very profitable market. 

We decided to focus our product on that because we’re a startup. We have startup costs; we have development costs; we’ve been spending years in R&D, so we need somehow to cover this. We can’t compete with a commoditized product. So, for example, we looked at fishmeal replacement. We were substituting mostly for something like soy, soya beans. I mean, soybeans are a commoditized product. Its trades are very established. I mean, there’s different markets within soy, but within a relatively small margin of each other.  We couldn’t really compete with those. We have startup costs for new technology, but soy has been around for many, many years, so we couldn’t really compete.  We had to focus on the markets which would allow us to develop the technology. It doesn’t mean that in the future we won’t do that.


Section nine: modular planning

Chris: So, you’ve already been operating for how long?

Riccardo: We’ve been here for eight years.

Chris: Eight years. Wow.

Riccardo: I think the way we look at it now is, we believe everything will be into full scale production about five years from now.  We’ve just closed a series of fundraising A and this funding will take us to about 12-18 months away, upon which time we’ll do a series B fundraiser that will be a fundraiser to deliver a full-size commercial scale version of the plant. So, we have the small scale of the operations and we’re going to do a full-sized commercial scale pilot plant and then we’ll have a Series C. It won’t be a series C as such, but we can think about it as a series C to then build a full-sized commercial scale facility.  How we size that will also depend on how we structure the capital. At the moment, we’re looking at having about a 150-million-dollar project. 

As I mentioned earlier, we have a modular sort of system.  So, when you think about the series B, it’s going to deliver the first module. We then take this module and multiply it five, ten times for the series C and that’s how it operates.  As we go along, we’re trying to de-risk every step of the way and that’s clearly what the investors need.  Any investor loves to have a de-risked project.  

What we’re trying to do right now is we’re de-risking a number of elements with the company, with the product. The next step ought to be to de-risk the production at full scale so it shows that we can do this consistently at a large scale.  By that point, we’ll be able to then move to the full-scale production.  Hopefully we will have the least surprises possible as we go along.  Keep in mind, this is new technology, I wouldn’t say it’s always experimental because all the things we use are known and there’s nothing implicitly so new about it, but it’s still putting it all together in a new shape or form.  There’s always clearly newness to that and you will come across hundreds of different things which you haven’t foreseen. This is typical, I guess, to think about with any sort project, even infrastructure.  We think about it when we think in the long term.

 So, as I said, it will be about five years before we start having full scale commercial production. But, if you look at it in the long term, we are thinking that we are going to become an infrastructure type investment in terms of the risk and in terms of the kind of capital.  This is very similar to the story which I came from.  Right now, we’re in venture capital money–so a high risk, high return sort of money. As we go along that journey, the capital and the capital providers, I’m forecasting, will be changing from what are now, at the moment, venture capital or grants, government backing, that kind of stuff to commercial equity, commercial debt and long-term infrastructure.  So, you know, pension funds and so on. And these are relatively long-term projects as well.

Chris: The continual hamster wheel of running around fundraising, which is typical with big infrastructure projects and big technology projects.

Riccardo: Well, people sometimes say fundraising is not a business model, but, at the moment, it is for us not necessarily a business model because we have a clear idea of what markets or project and how we’re going to do it, but we still have to go through that sort of substance, you know, with any project.

Chris: Yeah. So, you’re sitting here eight years in with another five years to go. I wonder what the founders thought.  Did they think it was going to be a ten-year program?  Also, you are sitting here kind of mid-cycle in your own career with the company before you’re on full production, still ten years of your life. How do you psychologically prepare for that?  How you prepare for that in terms of the finances of the business I think you’ve already covered, but really more kind of psychologically, how do you prepare when you think I’m going to be involved in this for the next ten years?

Riccardo: So, in terms of how do we prepare for what is a long-term journey as an entrepreneurial company, I think that has several challenges. A little bit depends on what kind of person you are and what you’re ready to take on as a firm, even from a career prospects perspective and a personal perspective. You know, obviously, you’re in a company where you’re always looking at a 12 months cash burn kind of thing, and that’s kind of my job. I look at how much cash we have, whether we’re going to run out, when do we need more?  What are the levers to pull?  So, on the one hand, I am very, very conscious of that because it’s my day to day and, at the same time, I think you have to have a bit of faith that you are going to be able to go to the next stage.

How do you go to the next stage?  You have to be very clear on being efficient with your runway and being sure that the money you’re using is actually going to give you a proper result; the money you’re using is going to be able to deliver the results you need in order to go to the next stage. The other thing is, obviously, we as a startup clearly are getting smaller compensation, but then you are also compensated with shares and part of the ownership.

I think this also again goes down to the type of person you are, whether you’re willing to take that risk and whether that is the kind of thing that works for you. You are really betting your own career on the future of the company.  At the end of the day, I think if you’re going to launch a company, you know you’re going to go for a certain type of company.  You have a certain type of role within a startup. You have many more roles. You can really help shape it.  I think it’s a little bit of, you know, a personal choice and it kind of comes with the territory.

I would almost argue that when you get into it, you should already know that you should set yourself up mentally for the possibility this might not work out but I’m trying it and I am going to keep on going. I’ve got to keep on being tenacious about it and scrappy about it. And then comes a point when you can be less scrappy and be a bit more professional.  

That’s the stage we are at as a company now.  We’re moving from that scrappy early stage to being a little bit more properly structured, a little bit more poised for growth. Now we’re putting system players policies in place, implementing a clear structure, getting proper advisors in place. It is important to really structure the company because then you can grow too. It’s going to be more and more important as we get more capital. We need to demonstrate that we have a company which can accommodate capital and which will use it effectively.  When you get investors, they’ll get the reassurance that the company is properly structured.  That’s a big, important step in our process.


Section ten: future contexts

Chris: And just on that point, do you see that the world has changed recently?

Riccardo: Well, I think the obvious is there’s a lot of geopolitics at play at the moment. There are a few things there. One is, I don’t think the climate change problem is going to go away. For my part, I’m part of that solution. So that’s not going to go away. What if it gets worse?  As companies and governments try to refocus their energy matrix, what does that mean? Are they going to move to more oil, more gas? Are we going to move to more nuclear, for example?  You know, small nuclear, for example, could be a solution, right? I mean, there’s several solutions around the table.  At the moment, it’s hard to say how the geopolitics of those are going play out.  If you look at, for example, electric vehicles and batteries and storage, those all have underlying geopolitics. Countries like Congo, Australia, Chile might come more into the mix. So, we might be changing dynamics and countries, but those underlying problems will just be shifting from one country to another.  The solution will be fluid, I guess, but it’ll still be a solution that needs to be managed.

Chris: Talking to you as the corporate financier, you say you’re not an economist, but you do have an MBA from London Business School. So, interest rates are on an upward trend. Inflation is on an upward trend. How would you then deal with the increased cost of capital as a corporate finance guy?

Riccardo: Well, so these are obviously all risks which we need to be aware of. I think they are developing.  We’ve had the luxury in the last 15 to 20 years to have a low interest world. The predictions have always been that they’ll be playing up and now we’re probably seeing that.  I think it’s going to obviously have an impact on the equity side. Credit, to my mind is, you know, let’s think of a corporate finance structure typically equity versus debt and debt is going to become more expensive and it is going to lead into what I would say are lower return or equity projects. It will have repercussions across the chain.  I think it is going to be a question of how do we adapt and how do investors deploy their capital and where to deploy it.

Chris: Yeah. Yeah. It is the trillion-dollar question in this new world. So, Riccardo I think if we’re finally going to be wrapping up this conversation, (it’s been fantastic! Thank you!) could we focus in on one last point?

There’s a lot of work going into the whole climate change area and there are dozens and dozens of micro aspects where people can be getting involved in this part or that bit if you’re passionate about climate change.  Why should someone who is, say, in the London business school studying or someone who’s sitting at home with the money in their pocket wondering whether they should be investing or someone who’s just thinking about making a career change, why should they be considering going into the space that you are in? …taking into account all your corporate finance skills and the skills that you had for moving into this very, very interesting niche.

Riccardo: I think there is obviously a wider sort of ethical question and there are many discussions around climate change. There are the believers and the non-believers.  I would say I, myself, would sit within the believers’ side, clearly, as demonstrated by my career, what I’ve been focusing on, delivering and what I believe in.  And, you know, once you take that as a given, it’s a responsibility, to my mind, towards future generations. That’s why I do it conceptually. I do believe a lot in legacy. So, to me that will be my legacy.  This is why I decided to spend my time doing this rather than something else. 

Obviously, that’s a personal thing. I think a lot of people could probably relate to that. I think if you think about it a little bit more, maybe pragmatically, there are a lot of funders searching, but not many quality projects. So, you know, I don’t say that if you start a company like this it would necessarily hit gold straight away. It’s not an easy journey. It’s pretty tough. We’ve been through the hard bits as well as the good bits, but I think what I would say to the community is try and be part of a solution. 

To me, this is being part of a solution, one of many solutions to climate change. We are removing carbon from the atmosphere before generating energy from clean sources.  There are many other ways in between, hundreds of different businesses and climate tech ventures, blockchains for renewable energy, you name it. I mean, electric vehicles, storage, green hydrogen. You know, there’s so many different solutions. Each one of these, in my opinion, presents what are really relevant businesses for today which solve a genuine problem and which are genuine, relevant problems we’re solving.

Chris: Well, that was a great note to end on.  I thoroughly enjoyed it! The conversation was fascinating!

Riccardo: Well, thank you for having me, Chris. It’s a pleasure to speak to you.



Watch the full video on our YouTube Channel or tune in to both the full video and the podcast over on our podcast page.